RES 17-85pity of Elk River
pity Council
Resolution 17- 85
A Resolution of the City Council of the City of Elk River Authorizing an
Interfund Loan for Advance of Certain Costs in Connection With a Tax
Increment Financing District
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, as follows:
Section 1. Background
1.01. The City and the Housing and Redevelopment Authority in and for the City
of Elk River, Minnesota (the "HRA") are considering establishing a Tax Increment
Financing District which is anticipated to include certain blighted and underused real
property located near the intersection of Main St NW and Gates Ave NW, and 3 s St NW
(the "TIF District") pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as
amended (the "TIF Act").
1.02. The City or the HRA may incur certain costs related to the TIF District
which may be financed on a temporary basis from available HRA funds.
1.03. Under Section 469.178, Subdivision 7 of the TIF Act, the City and the HRA
are authorized to advance or loan money from any fund from which such advances may be
legally made in order to finance expenditures that are eligible to be paid with tax increments
under the TIF Act.
1.04. The City has determined that it or the HRA may pay for administrative costs
associated with the establishment of the TIF District and certain other costs incurred in
connection with the proposed development of the TIF District, including but not limited to
a study of blighting conditions, engineering, land and building acquisition of properties along
Main St NW, Gates Ave NW and 3`s St NW, demolition and site preparation costs (the
"Costs Advances") on a temporary basis from the City's General Fund, the HRA's General
Fund or any other fund from which such advances, from time to time, may be legally made
(the "Fund") as an interfund loan pursuant to Minnesota Statutes, Section 469.178, Subd. 7.
1.05. The City hereby designates the Costs Advances as an interfund loan in
accordance with the terms of this resolution and the TIF Act.
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MATURE
Section 2. Regiment of Interfund Loan.
2.01. The City will reimburse itself or the HRA for the Costs Advances including
without limitation (i) administrative costs incurred prior to the establishment of the TIF
District, subject to the limitations of the TIF Act, and (ii) certain costs incurred in
connection with a study of blighting conditions, engineering, land and building acquisition,
demolition and site preparation costs in an aggregate amount not to exceed the greater of
$1,100,000 or the adopted and, if applicable, amended Tax Increment Financing Plan budget
for the TIF District (the "Interfund Loan"), together with interest at the rate prescribed by
the statute (Minnesota Statutes, Section 469.178, Subdivision 7), which is the greater of the
rates specified under Sections 270C.40 or 549.09 at the time a Interfund Loan, or any part of
it, is first made; provided, however, the City Finance Director is authorized to specify a
lower rate.
2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid annually on
February 1 (the "Payment Date"), commencing on the first Payment Date on which the City
or the HRA has received Available Tax Increment (defined below), or on any other dates
determined by the City Finance Director, through the date of last receipt of tax increment
from the TIF District (the "Maturity Date").
2.03. Payments on the Intetfund Loan will be made solely from the tax increment
from the TIF District received by the City or the HRA from Sherburne County in the 6 -
month period before any Payment Date, net of the amount paid under any agreement with a
private developer or otherwise pledged to the payment of any obligation (the "Available Tax
Increment"). Payments shall be applied first to accrued interest, and then to unpaid
principal, unless otherwise specified by the City Finance Director. Interest accruing from
the Loan Date will be compounded semiannually on February 1 and August 1 of each year
and added to principal, unless otherwise specified by the City Finance Director. Payments
on this Interfund Loan may be subordinated to any outstanding or future bonds, notes, or
contracts secured in whole or in part with available tax increment, and are on a parity with
any other outstanding or future interfund loans secured in whole or in part with available tax
increment.
2.04. The principal sum and all accrued interest payable under this resolution is
pre -payable in whole or in part at any time by the City or the HRA without premium or
penalty.
2.05. This resolution is evidence of an internal borrowing by the City or the HRA
in accordance with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation
payable solely from Available Tax Increment pledged to the payment hereof under this
resolution. The Interfund Loan shall not be deemed to constitute a general obligation of the
State of Minnesota or any political subdivision thereof, including, without limitation, the City
or the HRA. Neither the State of Minnesota, not any political subdivision thereof shall be
obligated to pay the principal of or interest on the Interfund Loan or other costs incident
hereto except out of Available Tax Increment. Neither the City nor the HRA shall have any
obligation to pay any principal amount of the Interfund Loan or accrued interest thereon,
which may remain unpaid after the termination or expiration of the TIF District.
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�rIATURE
2.06. The City or the HRA, as applicable, may at any time make a determination to
forgive the outstanding principal amount and accrued interest on the Interfund Loan, in
whole or in part, on any date from time to time, to the extent permissible under law.
2.07. The City may from time to time amend the terms of this Resolution to the
extent permitted by law, including without limitation amendment to the payment schedule
and the interest rate; provided that the interest rate may not be increased above the
maximum specified in Section 469.178. subd. 7 of the TIF Act.
Section 3. Effective Date. This resolution is effective upon adoption.
Passed and adopted this 18`x'day of December 2017.
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ATTEST:
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Tina Allard, City Clerk
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